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Wall Street trims gains after surge on China yuan

Wall Street trims gains after surge on China yuan
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First Published: Tue, Jun 22 2010. 12 11 AM IST
Updated: Tue, Jun 22 2010. 12 11 AM IST
New York: US stocks rose on Monday after China’s vow to allow a flexible yuan currency, but shares came off highs as worries about US joblessness and Europe’s debt problems returned.
China’s statement reassured investors about the global recovery and improved the profit outlook for many US multinational companies.
Energy, other materials and manufacturing shares were among the leaders as commodities were boosted by the yuan’s move higher against other currencies. The Dow industrials jumped more than 140 points in the morning.
China’s yuan surged the most since its revaluation in 2005 following a surprise weekend announcement by China’s central bank.
“This move is going to be good for global markets and help the bottom lines of companies with Chinese exposure,” said Channing Smith, vice president of Capital Advisors in Tulsa, Oklahoma.
Caterpillar Inc gained 1.8% to $67.03, while Freeport-McMoRan Copper & Gold Inc jumped 5.1% to $69.26. Dow component Alcoa Inc climbed 7% to $11.89, posting its strongest day so far this year.
But markets were off session highs after recent gains, leaving the market vulnerable from a technical perspective.
“Markets have had a good run and investors haven’t forgotten that we face headwinds with Europe and the labor market.”
The Dow Jones industrial average was up 50.71 points, or 0.49%, at 10,501.35. The Standard & Poor’s 500 Index was up 3.83 points, or 0.34%, at 1,121.34. The Nasdaq Composite Index was up 1.25 points, or 0.05%, at 2,311.05.
The S&P 500 briefly broke above 1,130, the midpoint between its 2010 high and low points and a key technical mark but was unable to hold the level. The index was up more than 8% in the past 10 trading days.
Tech shares weighed on the Nasdaq, briefly sending it into negative territory, with Google Inc falling 1.4% to $492.82 and Dow component Microsoft Corp off 1% at $26.17.
Retailers were also a drag on the expectation of higher costs on imports from China. Dow component Wal-Mart Stores Inc fell 1% to $51.06. The S&P retail index shed 0.9%.
“It seems everything in the low-cost retailers is made in China,” said Brian Gendreau, market strategist affiliated with Financial Network Investment Corporation in El Segundo, California.
In deal news, Biovail Corp agreed to buy Valeant Pharmaceuticals International in a complex deal worth roughly $3.3 billion engineered by the US drug maker to preserve a lower tax structure. Biovail gained 12% to $16.41 on the New York Stock Exchange while Valeant was up 1.6% to $46.61.
BP’s US-listed shares slid 3.6% to $30.63 after an internal BP document released by a US lawmaker estimated that a worst-case scenario for the Gulf of Mexico oil spill could be about 100,000 barrels per day.
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First Published: Tue, Jun 22 2010. 12 11 AM IST
More Topics: Markets | Stocks | Wall Street | China | Yuan |